By Jerry Slusiewicz
 
Due to the recent Screen Writers strike, Hollywood has been accepting plots for almost anything.
 
Scene One: Our protagonist Jim, a handsome college graduate from Cleveland Ohio and an OC resident for ten years, is seen sitting on a beach at sunset recalling just how he got into this mess.  There are a lot of beautiful people around--so OC.

Scene Two:  Jim flashes back to one year ago when everything seemed so right at his job as a mortgage broker at New Century Financial.  Jim realizes that most of the loans he made over the last two years were to people who couldn't afford their house. Jim isn't worried, he assures himself that California Real Estate only goes one in direction--up.  

In the scene everyone is gathered around an office TV watching Former Federal Reserve Chairman Alan Greenspan warn about subprime debt and a possible economic recession.  Greenspan also states that the mortgage crisis was 'an accident waiting to happen'.  Jim recalls how all of his colleagues laughed when they heard that comment.
 
Bill, Jim's boss who is a few years younger, said that Greenspan is the one who lowered interest rates excessively and kept them low for years.  These low rates helped housing prices increase over 160% for the OC, twice the national average.  Now fewer people were able to afford a median $623,000 home.  Bill explained these low rates helped lenders create a new breed of new fangled, no money down, ridiculously low teaser rate, interest only, negative amortization, no income verification loans; so everyone with or without credit or money to put down could afford to own a home!
 
As a matter of fact, Bill stated, in 2006 (at the peak of the real estate market), 40% of California first time home buyers and 21% of all California home buyers made their purchase without a down payment--ouch!   Bill also credited the banks for "relaxing underwriting standards" because they couldn't securitize home loan paper fast enough to sell off to global investors who wanted a piece of the OC.  Mortgages were packaged into Structured Investment Vehicles, Collateralized Debt Obligations, and Asset Backed Commercial Paper.  Many of these investors forgot to do their due diligence when it came to the alphabet soup of boiling bad debt.

Jim wasn't exactly sure what Bill meant, but he was happy to be working in Irvine, earning a cool half million per year.  Jim knew he had made it!  He pictures just how happy he was helping people buy homes they couldn't afford as he raked in the dough, surrounded by beautiful people--so OC.

Scene Three:  Jim recalls the nightmare at home when he told his seemingly desperate wife (who coincidentally stars in her own reality TV show) that New Century had closed its doors and he was unemployed.  He also told her that since they had only three months savings (A Robin Leach voiceover is heard in the background of Jim's imagination, something about living the life of the Rich and Famous), they ought to sell the two spec condos in Vegas and their investment property in Phoenix.  She reminded Jim they had just purchased all those properties in the last 18 months.
 
Scene Four:  We see Jim walking along the shore.  He thinks back to last year's holiday party.  Jim's friend Bob, who worked for Countrywide Financial, tells Jim that he was one of 11,000 workers in Southern California who lost jobs due to cutbacks in the industry.  With recent merger activity, more local jobs losses are forthcoming.  Bob says, there are no more 100% loan to value mortgages to be had.  Most OC loans have almost a 20% premium over conventional mortgage rates.  20% down payments are now required as banks struggle under new regulations.  Banks have become reluctant to lend.  Getting a loan has become more complicated--you actually have to qualify!   This has knocked a significant percentage of home buyers completely out of the market.

Another partygoer, OC stockbroker Dan, laments how bad the stock market has been performing.  He says things are rough.  First quarter earnings from financial firms are expected to be down 67% from last year.  Dan asks if the firms that provide money aren't doing well, how can the rest of the economy sustain?

Dan tells Jim about a recent report from Lehman Brothers.  It stated that by the end of 2007 the decline in California existing home sales was over twice as worse as the national average.  Existing home sales in California are down 60% peak to trough versus the 67% decline in the 1980s and the 41% decline in the early 1990s.  Jim ponders, Geez, I moved here in 1997!  Why didn't someone tell me that real estate can go down?
 
Jim chokes when he hears the Lehman report estimate that 50% of existing home sales in California could come from foreclosures in 2008 and 69% in 2009!  Dan also relays the opinion from Goldman Sachs, that another 35% drop in California real estate prices is possible.  Another local survey showed that 80 of 83 OC zip codes have had a foreclosure.  This was obviously a widespread problem.

Scene Five:  Jim sits back on the warm sand to scan his iPhone.  The headline reads:  The city of Cleveland, struggling with soaring foreclosures, has sued 21 home-loan firms.  The city is claiming mortgage defaults were due to improper subprime lending practices. The city seeks millions of dollars in damages; these lenders hurt property values and tax collections which will result in potentially curtailing some city services. Other cities, counties, and states could follow suit.
 
Jim is finally clued in.  Housing has fallen off a cliff, a lot of mortgages aren't worth the paper they're written on, oil prices have gone through the roof and ordinary folks are worried.  Is this just a problem for Jim, or is a recession coming to the OC?  Naw!  It's just Jim--look around at all these beautiful people--so OC!  At least the weather is nice here. 

Pilot Canceled: Even Hollywood can't write its way out of this bind.